Friday, June 5, 2009

WestJet Airlines Ltd. moved fewer passengers in May even as the number of seats it was trying to fill grew in the month, according to numbers released Wednesday.

Worse still, the Calgary-based airline's shrinking load factor might be the start of a trend rather than a one-off event.

"A continued weakened economy and aggressive pricing are leading to reduced fare levels, making it a difficult quarter," said Sean Durfy, WestJet's president and chief executive officer.

In May, WestJet's load factor — a gauge of airline efficiency that measures how many paying customers the carrier packed into available seats — tumbled to 74.1 per cent.

That level was 5.4 percentage points less than May 2008, prior to the real beginning of the global credit crunch.

WestJet's efficiency in the January-to-May time frame stood at 79.3 per cent, down 2.3 percentage points versus the same five months in 2008.

Three-month stock chart for WestJet

The airline's available seat miles, essentially how many seats WestJet had to fill, rose 1.2 per cent to 1.436 billion. But, the revenue passenger miles, a way of looking at the carrier's cash coming in, fell by 5.8 per cent, to slightly more than one billion.

Recessionary pain

Comparing the load factor for the same month between two years tends to eliminate seasonal factors that shift travel habits within a single 12-month period.

Given the recession that slammed industrialized economies in the fall and winter of 2008, however, most analysts expected year-over-year load factors to fall substantially.

Still, WestJet's trend has turned negative.

First, May's figure was 7.5 percentage points lower than the measure for April. In addition, the latest number was the lowest reading for 2009 so far.

As well, the year-to-date load factor — which approximates a moving average for every month except January — stalled in April and then headed southward in May.

Still in the black

Despite its weakening metrics, WestJet was profitable in the first quarter, making $37.4 million in the period on $579.3 million in revenue.

Durfy said he expects the difficult economy to result in a drop of 16 to 18 per cent in the revenue per available seat mile in the second three months of the year compared with the same quarter one year earlier.